GKN Automotive’s China JV to Invest US$850 Million to Drive Growth

Wednesday, Apr 22, 2015

The Chinese joint venture between GKN Automotive and Huaya Automotive is spending US$850m over the next five years to meet growing demand for the company’s driveline systems, all-wheel drive (AWD) and hybrid technology.

Automotive production in China is forecast to grow by 42% by 2022, increasing from 22.6m vehicles in 2014 to 32.1m. Demand for AWD systems is expected to grow even more strongly – up by 140% in the same period.

GKN was one of the first Tier One suppliers to enter China, establishing its joint venture GKN Huayu Driveline Systems in 1988. Consistent year on year growth resulted in record production of side shafts and torque products in 2014. GKN Automotive, which encompasses GKN Driveline and GKN Powder Metallurgy, operates 11 plants across China, employing over 5,000 people.

Construction of a 22,000sq m technical centre in Shanghai for the joint venture is due to end in December 2015. The facility, which will be part of a global technology centre network, will provide research and development capability for complete driveline systems, including vehicle integration, software development and vehicle testing capabilities. An 18 month recruitment programme for 200 technologists and engineers is also under way.

The company’s production capacity will also be substantially increased in plants across Shanghai, Chongqing, Wuhan, Changchun and Yizheng with a new assembly plant planned in Chengdu. GKN Powder Metallurgy will also expand its production capacity with a new plant in Danyang, due to open later this year.

"The investment cements GKN’s position as the world’s leading driveline system partner to automakers globally," the supplier said in a statement.

This year the company became the first Tier One automotive supplier to design, develop and manufacture a complete AWD system for an automaker in China. It supplies SAIC Motors’ new MG GS compact SUV with its complete AWD system, including vehicle integration and software control, as well as the front wheel drive system. The programme follows a number of global complete AWD and hybrid programmes, including AWD Disconnect system on the recently launched Jeep Renegade and Fiat 500X and eAxles for the Porsche 918 Spyder plug-in hybrid and BMW i8.

"The investment further strengthens GKN’s position as the global leader in advanced driveline technologies," the supplier said in a statement.

GKN Automotive chief executive, Andrew Reynolds Smith, said: “The scale of this investment reflects our commitment to global and domestic auto makers as their businesses in the world’s largest vehicle market evolve. Cutting edge technology is critical for our customers globally and in China, particularly as the next generation of AWD and hybrid vehicles launch creating new levels of competitive advantage in the market.”

Arnaud Lesschaeve, GKN Driveline Asia Pacific President, said: "GKN is the only driveline supplier that can design, develop and produce intelligent AWD and hybrid AWD systems completely in house. We are also the market leader in constant velocity joint technology, an essential component in vehicle efficiency improvements. This investment underlines our commitment to customers in the region and GKN’s capacity to deliver globally."